A BILL to amend the Code of Virginia by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered 58.1-339.15, relating to income tax; credit for certain health care providers.
HB1123 creates a new Virginia individual income tax credit for certain health care providers who deliver services in medically underserved communities. Beginning with taxable years starting on or after January 1, 2026 and before January 1, 2031, an eligible provider may claim a $5,000 nonrefundable credit for at least 1,600 hours of service in an underserved community during the year. Providers who do not meet that higher threshold may claim a $2,500 nonrefundable credit for at least 800 hours of service in such a community.
The bill defines eligible providers broadly to include nurse practitioners, physician assistants, physicians, advanced practice registered nurses, registered nurses, behavioral health providers, social workers, counselors authorized by the Board of Counseling, and veterinarians. It also limits the credit to two taxable years per provider, caps the credit at the taxpayer’s liability with a five-year carryforward for unused amounts, and sets an aggregate statewide cap of $5 million per year allocated on a first-come, first-served basis. The Tax Commissioner, in consultation with the Board of Health, would be required to issue guidelines for claiming the credit, and those guidelines would be exempt from the Administrative Process Act.
HB1123 would add a new section to the Virginia Code under Title 58.1 governing income tax credits, specifically creating § 58.1-339.15. Its practical effect would be to reduce income tax liability for qualifying health care providers who work in medically underserved areas, while also establishing administrative rules, eligibility criteria, and a statewide annual cap on available credits. The bill would affect individual taxpayers in the covered professions, the Department of Taxation, and the Board of Health’s role in identifying underserved communities.
Based on the bill’s structure and sponsorship, the measure appears intended as a workforce incentive and access-to-care policy, with a generally supportive policy rationale of encouraging providers to serve underserved communities. There is no recorded committee transcript or vote history in the provided materials, and the bill was left in Finance, so no formal floor-level sentiment is available. The broad inclusion of multiple health professions suggests an effort to build support across health care and behavioral health fields.
The main points of potential contention are fiscal cost, fairness of the credit design, and administrative implementation. The annual $5 million cap and first-come, first-served allocation may raise concerns about whether the credit will be distributed equitably or simply to those best positioned to apply early. Some may also question the breadth of the eligible provider definition, which includes both human health care and veterinary providers, and whether the hour thresholds and two-year limit are sufficient to meaningfully influence provider placement in underserved communities.